Taking 2x small pots

Mozza001

The time has arrived, part of my plan at hitting 55 is taking 2x 10k small pots next month.

I am in a workplace pension and currently pay in 6% of salary, my earnings are 43k.

So after taking off 5k TFLS my earnings with the small pots will be 58k, which puts me into 40% tax on 8k of earnings.

Logic would tell me to up my contribution to bring my earnings down to 50k to avoid that extra tax.

1. Is this allowed?
2. If s my logic flawed above?
3. Is taking the 2nd small pot a bad idea?

Many thanks in advance.

Marcon

Mozza001 said:

The time has arrived, part of my plan at hitting 55 is taking 2x 10k small pots next month.

I am in a workplace pension and currently pay in 6% of salary, my earnings are 43k.

So after taking off 5k TFLS my earnings with the small pots will be 58k, which puts me into 40% tax on 8k of earnings.

Logic would tell me to up my contribution to bring my earnings down to 50k to avoid that extra tax.

1. Is this allowed?
2. If s my logic flawed above?
3. Is taking the 2nd small pot a bad idea?

Many thanks in advance.

1. Yes
2. Why do it at all?
3. No idea - what are you trying to achieve?

Dazed_and_C0nfused

Mozza001 said:

The time has arrived, part of my plan at hitting 55 is taking 2x 10k small pots next month.

I am in a workplace pension and currently pay in 6% of salary, my earnings are 43k.

So after taking off 5k TFLS my earnings with the small pots will be 58k, which puts me into 40% tax on 8k of earnings.

Logic would tell me to up my contribution to bring my earnings down to 50k to avoid that extra tax.

1. Is this allowed?
2. If s my logic flawed above?
3. Is taking the 2nd small pot a bad idea?

Many thanks in advance.

The ability to reduce your earnings is only possible if you make pension contributions using the net pay method.  Or you sacrifice some income in return for additional employer contributions.

If not then you can achieve the same outcome but your earnings will remain the same.

Why is taking two small pots part of your plan in the first place?

Mozza001

Marcon said:

Mozza001 said:

The time has arrived, part of my plan at hitting 55 is taking 2x 10k small pots next month.

I am in a workplace pension and currently pay in 6% of salary, my earnings are 43k.

So after taking off 5k TFLS my earnings with the small pots will be 58k, which puts me into 40% tax on 8k of earnings.

Logic would tell me to up my contribution to bring my earnings down to 50k to avoid that extra tax.

1. Is this allowed?
2. If s my logic flawed above?
3. Is taking the 2nd small pot a bad idea?

Many thanks in advance.

1. Yes
2. Why do it at all?
3. No idea - what are you trying to achieve?

I am buying a house  with some of my TFLS from a larger pension and savings, i dont want to us ALL savings/TLS so this is a way of getting an extra 15k+ out without going into drawdown.

Mozza001

Dazed_and_C0nfused said:

Mozza001 said:

The time has arrived, part of my plan at hitting 55 is taking 2x 10k small pots next month.

I am in a workplace pension and currently pay in 6% of salary, my earnings are 43k.

So after taking off 5k TFLS my earnings with the small pots will be 58k, which puts me into 40% tax on 8k of earnings.

Logic would tell me to up my contribution to bring my earnings down to 50k to avoid that extra tax.

1. Is this allowed?
2. If s my logic flawed above?
3. Is taking the 2nd small pot a bad idea?

Many thanks in advance.

The ability to reduce your earnings is only possible if you make pension contributions using the net pay method.  Or you sacrifice some income in return for additional employer contributions.

If not then you can achieve the same outcome but your earnings will remain the same.

Why is taking two small pots part of your plan in the first place?

I pay into pension by salary sacrifice.

As above, a way of getting 15k odd out without drawing down to put towards house purchase, dont want to rinse all  TFLS from larger pensions.

Albermarle

Mozza001 said:

The time has arrived, part of my plan at hitting 55 is taking 2x 10k small pots next month.

I am in a workplace pension and currently pay in 6% of salary, my earnings are 43k.

So after taking off 5k TFLS my earnings with the small pots will be 58k, which puts me into 40% tax on 8k of earnings.

Logic would tell me to up my contribution to bring my earnings down to 50k to avoid that extra tax.

1. Is this allowed?
2. If s my logic flawed above?
3. Is taking the 2nd small pot a bad idea?

Many thanks in advance.

Are you sure your workplace pension can allow you to take a small pot under the small pots rule?

Some pension providers do not offer this facility at all, and an even smaller number will split off small pots from a bigger one.

Mozza001

Albermarle said:

Mozza001 said:

The time has arrived, part of my plan at hitting 55 is taking 2x 10k small pots next month.

I am in a workplace pension and currently pay in 6% of salary, my earnings are 43k.

So after taking off 5k TFLS my earnings with the small pots will be 58k, which puts me into 40% tax on 8k of earnings.

Logic would tell me to up my contribution to bring my earnings down to 50k to avoid that extra tax.

1. Is this allowed?
2. If s my logic flawed above?
3. Is taking the 2nd small pot a bad idea?

Many thanks in advance.

Are you sure your workplace pension can allow you to take a small pot under the small pots rule?

Some pension providers do not offer this facility at all, and an even smaller number will split off small pots from a bigger one.

The small pots arnt coming from workplace pension, I have 20k sat in HL allocated for this.